An update to my October post regarding the possibility of insider trading prosecutions moving west . . . is the Supreme Court trying to stop that from happening?
The Supreme Court today announced that it will consider the appeal in Salman, a Ninth Circuit case which conflicts with the landmark Newman decision out of New York. The Salman decision established a lower burden of proof for the government to obtain convictions in certain cases, leading me to speculate that the DOJ may try to prosecute more insider trading cases in the western United States (home of the Ninth Circuit). By taking up the Salman case after turning down the government appeal in Newman, maybe the justices are signaling that the higher burden in Newman is going to be the law of the land.
Given that the crime of insider trading is not based on any specific statute but instead is a prosecution/judicial construct, I am still hoping Congress will eventually take up the issue and define the crime, as has been proposed. But in the meantime, maybe there is hope that with one of its first insider trading decision in thirty years, the Supreme Court will give us a little more clarity. And if the justices took Salman in order to effectively affirm the ruling in Newman, it will help rein in over-reaching prosecutors until Congress finally acts.